Will a new private label keep Target’s customers out of Aldi and Dollar General?
Target is introducing a new line of toiletries and household cleaning products with the goal of attracting budget-conscious shoppers to its stores and target.com.
The new line — Smartly — includes more than 70 items, such as all-purpose cleaners, body lotions, dish soap, razors and toilet paper with prices ranging from 59 cents to $11.99. Most sell for less than $2 and are targeted at consumers who purchase these items in small quantities.
“It’s about showing people that I don’t have to go to Aldi or I don’t have to go to Dollar General to find what I’m looking for,” Mark Tritton, Target’s chief merchandising officer, told The Wall Street Journal.
Target will introduce the Smartly line in the middle of this month. The private label will be priced at about 70 percent less than comparable national brands made by companies such as Procter & Gamble. Smartly items, according to the Journal, will be priced at about 50 percent of Target’s own Up & Up private brand line.
While CEO Brian Cornell has lauded Target’s “enhanced and differentiated shopping experience” as the key factor driving customers to its stores and target.com, the retailer has also touted price competitiveness as a key element in its strategic plan. Target continually emphasizes, for example, that holders of its REDcard credit cards receive an additional five percent discount off purchases from the chain. The retailer’s popular Cartwheel program also offers additional discounts of five percent and higher on items throughout the store.
Mr. Cornell has been willing to sacrifice profits in some areas such as home delivery to compete with larger rivals, Amazon.com and Walmart. During the summer, for example, the retailer announced that it would offer free next day delivery to holders of its REDcard on orders from Target Restock, the chain’s answer to Amazon’s Prime Pantry program.
Target’s combined comp sales grew 6.5 percent during the second quarter as revenues at it stores improved 4.9 percent and online jumped 41 percent. It reported 6.4 percent traffic growth, the highest quarterly increase at the chain since 2008.
DISCUSSION QUESTION: How do you see Target’s new Smartly line fitting in with its private and exclusive label strategy? Will the new line be successful in keeping a greater percentage of its budget-conscious shoppers from going to rivals such as Aldi and Dollar General?